Rental buildings a hot commodity in Metro Vancouver

In Metro Vancouver last year, 181 rental apartment buildings were sold. The average price per suite was $362,424 in the city and $205,476 in the suburbs.

Photograph by: ian lindsay , Vancouver Sun

Sales of rental apartment buildings in Metro Vancouver surged 47 per cent in 2015 — and the total value of all sales of apartment buildings went up 99 per cent from 2014.

But that’s because most of the apartment blocks sold were bigger. The number of suites in the 181 buildings sold in 2015 was 6,259, up from 3,282 in 123 buildings the year before. The average price paid per suite was up only five per cent, to $247,879 in 2015 from $237,025 in 2014.

The figures come from the Goodman Report, a newsletter for apartment owners put out by commercial realtors David and Mark Goodman.

David Goodman said the increase was due to several factors.

“Obviously there’s low interest rates,” said Goodman.


“There’s a significant lack of supply. There’s just not enough land in the Lower Mainland, and when there is land it’s difficult as hell to develop new rentals, very difficult.

“Besides that, there is a staunch opposition to tearing down older rental buildings. It seems to be ingrained in the DNA of politicians — protect at all costs existing rentals.”

Goodman tracks 3,020 apartment buildings in Metro Vancouver. Last year 78 buildings were sold in Vancouver and 103 in the suburbs. The average price per suite was $362,424 in the city and $205,476 in the suburbs.

In dollar value, this worked out to sales of more than $612 million in Vancouver, and more than $938 million in the suburbs, for a total of more than $1.5 billion.

There were 17 apartment blocks sold in the West End, 15 in Kitsilano, and 14 in both East Vancouver and Marpole. The highest prices per suite were registered by buildings near UBC, $769,231, followed by Kerrisdale at $611,340 and the West End at $392,192.

Burnaby led the suburbs with 36 sales of apartment buildings, followed by New Westminster with 22 and North Vancouver with 10.

The prices paid were significantly less than in the City of Vancouver. Apartments in North Van sold for $289,362 per suite, in Burnaby for $260,036 and in Richmond for $251,880. Apartments in Maple Ridge sold for $92,614 per suite, and in Surrey for $128,419.

Goodman said most buyers of rental apartments are local.

“I would say 80 per cent of them are local,” he said.

“We know them all, it’s the same players over and over again. What has changed a bit this year is that there is investment coming in from China. Not an avalanche, they’re (usually) buying land.”

Goodman said the net result of all the sales will be that rents will go up. But there are other factors in those rent increases, such as when a long-term tenant moves out and a landlord renovates the suite.

“Why have rents gone up beyond 2.9 per cent, which is the mandated rent increase? Because if you own a building and you’ve had a tenant living there for 14 years and they finally leave, it goes from typically $900 or $1,000 to $1,400.

“And they paint it, they spend money on the suite, they’ll spend $10,000 to $15,000 on a unit and mark it up 30/40 per cent. Well, when you have some of those happening, it skews the 2.9 so it reports as four to five per cent.”

Vancouver councillor Geoff Meggs notes that half the city’s population lives in an estimated 67,000 rental apartments. He said the high prices paid for apartment blocks is “worrisome,” and said the city is doing everything it can to keep and expand rental stock.

“In Vancouver and I think maybe North Van you have to replace a rental unit if you tear it down,” Meggs said.

“But in some other municipalities, notably Burnaby, that’s not the case. And we’ve seen significant losses, which is discouraging. These are valuable lower-cost units, and they’re being snapped up in some cases for redevelopment as condominiums, depending on the municipality.”

Meggs said Vancouver insists developers build rental apartments in any new project.

“All major developments already have a 20 per cent requirement in our case,” he said.

“If it’s too small a project to warrant construction of the units right there, the money goes into a fund instead and we build it nearby. The rental program requires it to stay rental for 60 years or the life of the building, whichever is longer.”

Goodman said that while Vancouver’s goal of building 800 to 1,000 new rental apartments per year is laudable, it falls far short of the demand.

“It’s really a paltry amount, given what the marketplace needs, probably 4,000 to 5,000 a year,” he said.


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January 5, 2016

Metro Vancouver home sales set an all-time record in 2015


In a year when the number of homes listed for sale was below historical averages, actual home sales in Metro Vancouver set a new record.

The Real Estate Board of Greater Vancouver (REBGV) reports that 2015 home sales were the highest annual total in REBGV history. This was powered early in the year by four straight months with more than 4,000 sales a month from March to June, another first for REBGV.

Sales of detached, attached and apartment properties in 2015 reached 42,326, a 27.8 per cent increase from the 33,116 sales recorded in 2014, and a 48.4 per cent increase over the 28,524 residential sales in 2013.

The total number of homes listed for sale on the MLS® in 2015 ranked fifth in the last ten years, while the MLS® Home Price Index (HPI) saw double-digit year-over-year price increases.

The number of residential properties listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in 2015 reached 57,249. This is an increase of 2.1 per cent compared to the 56,066 properties listed in 2014 and an increase of 4.6 per cent compared to the 54,742 properties listed in 2013.

With sales-to-active-listings ratios above 25 per cent for 11 months in 2015, the Metro Vancouver market experienced seller’s market conditions for much of the year.

"Home buyers were active and motivated throughout 2015 despite the pressure on supply of homes on the market," Darcy McLeod, REBGV president said. "Housing markets typically experience quieter periods within a calendar year, but that wasn't the case in Metro Vancouver last year."

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver ends the year at $760,900. This represents an 18.9 per cent increase compared to December 2014.
“We often hear economists say that seller’s market conditions put upward pressure on home prices,” McLeod said. “That was certainly the case in 2015, with price increases ranging from 14 to 24 per cent depending on property type.” 
December summary
Residential property sales in Greater Vancouver totalled 2,827 in December 2015, an increase of 33.6 per cent from the 2,116 sales recorded in December 2014 and a 19.8 per cent decline compared to November 2015 when 3,524 home sales occurred.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 2,021 in December 2015. This represents a 7 per cent increase compared to the 1,888 units listed in December 2014 and a 40.4 per cent decline compared to November 2015 when 3,392 properties were listed.

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 6,024, a 41.6 per cent decline compared to December 2014 and a 25.6 per cent decrease compared to November 2015.

Sales of detached properties in December 2015 reached 1,136, an increase of 36.4 per cent from the 833 detached sales recorded in December 2014. The benchmark price for detached properties increased 24.3 per cent from December 2014 to $1,248,600.

Sales of apartment properties reached 1,225 in December 2015, an increase of 34.3 per cent compared to the 912 sales in December 2014.The benchmark price of an apartment property increased 14 per cent from December 2014 to $436,200.

Attached property sales in December 2015 totalled 466, an increase of 25.6 per cent compared to the 371 sales in December 2014. The benchmark price of an attached unit increased 13.6 per cent from December 2014 to $543,700.


East Vancouver home owners can expect biggest assessment increases

Owners of single-family houses in East Vancouver can expect some of the biggest increases in the assessed value of their homes for 2016.

Photograph by: Gerry Kahrmann , PNG

Owners of single-family houses in East Vancouver can expect some of the biggest increases in the assessed value of their homes for 2016.

Annual assessment notices from BC Assessment were in the mail Monday morning, and homeowners in many parts of Metro Vancouver can expect increases as high as 25 per cent on detached homes, according to Assessor Jason Grant.

“Increases of 15-25 per cent will be typical for single-family homes in Vancouver, North Vancouver, West Vancouver, Burnaby, Tri-Cities, New Westminster and Squamish,” Grant said in a news release.

“Typical strata residential increases throughout the region will be in the five to 10 per cent range.”

The release gives examples of homes in each city, including a home on the east side of Vancouver valued at $1.575 million last year that has now been assessed at $1.94 million — a jump of 28 per cent. The west side example increased in value by 23 per cent.

Over in the Fraser Valley region, which includes Richmond, Delta, Surrey, White Rock, and every thing to the east, assessment increases are a bit more modest.

“Properties in South Delta and parts of Richmond will generally see the highest per cent increase within the region,” Grant said.

Urban areas in the Fraser Valley can expect increases of between five and 25 per cent. An example home in south Richmond saw a jump of 20 per cent, whereas the value of a house in east Richmond only rose by eight per cent.

Assessment increases are less dramatic in Whistler, Pemberton and the Sunshine Coast, where values have typically risen by between zero and 15 per cent.

Commercial and industrial properties near Vancouver are also seeing big increases of 10-20 per cent, or even higher for properties being bought with redevelopment in mind.

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